Is Digital Marketing Killing Magazine Ads?

Is Digital Marketing Killing Magazine Ads?
BY Jason Baer


A report last week by the Publishers Information Bureau found that advertising pages in the nation’s magazines declined by 7.4% compared to the first half of 2007.

With the stock market down by about 20%, and house prices down at least that much in some parts of the country, a 7% dip in magazine ads may seem less frightening than the prospect that Angelina Jolie will somehow end up being mother to all of the world’s children.

However, there are two inexorable trends in marketing right now and neither bode well for magazines mid or long-term. The economy will rebound at some point, but even when that happens, will magazines recoup their share of the advertising pie? In general, I think not.

First, marketing is increasingly about measurability, and on that front magazines score no better than any other “traditional advertising” tactic like TV, radio, or newspaper. I would put magazines ahead of outdoor on that scale, because at least they have audited circulation. But how does the savvy marketing director (or agency media buyer) determine the financial impact and ROI of magazine? Short of tracking URLs and phone numbers (which basically pass the measurement buck off to another medium), it’s pretty difficult to isolate the effect of a magazine buy - which is why digital marketing is growing and everything else is stagnating in this down economy.

The second issue for magazines is speed. The lead times required by monthly magazines for advertising and editorial are positively anachronistic. Consumer magazines are working on their October issues right now. Seriously? By October, Brett Favre could be playing quarterback for the Bears, and all of California could be on fire. In these uncertain times, committing to expensive magazine ads 90 days in advance seems like a leap of faith that fewer advertisers are willing to make.

And speaking of speed, magazines without an especially sharp editorial focus and solid reporting are going to have a tough time in a culture where information is conveyed in 160-character bites RIGHT NOW. Interestingly, some of the magazines showing the biggest decline in ad pages this year are those who cover topics that are perhaps covered better online by sites and blogs.

Blender (-23.5%). See www.pitchforkmedia.com, last.fm

Business Week (-14.8%) See www.thestreet.com, www.cnbc.com, www.businessweek.com

PC Magazine (-35.8%) See www.gizmodo.com, www.cnet.com

Newsweek (-22.4%) Time (-21.1%) and U.S. News (-30.3%) See www.huffingtonpost.com, www.nytimes.com, and Twitter, where thousands of people are discussing current events as they happen, not a week later.

Interestingly, one area of magazine-ville that showed consistent gains was food publications. With gas and food prices soaring, Americans are eating out less and trying to craft delicious meals at home. I’m not sure this trend is going to do anything about the obesity problem, however, as Cooking with Paul Deen ad pages were up 31%. That lady is physically incapable of executing recipes without at least one pound of sour cream.

Internet Ad Revenue Charges Ahead

Internet Ad Revenue Charges Ahead
IAB Suggests 35% Growth in Its Year-End Report
By Emily Tan

Published: May 24, 2007

NEW YORK (AdAge.com) -- Internet ad revenue grew 35% in 2006, with search, display, classifieds and lead-generation categories continuing to rise at a healthy clip while e-mail, sponsorship and slotting fees remained flat or lost share of the total online ad market.
The IAB said online growth is coming from advertisers using the web to drive product awareness, purchase intent and brand loyalty.

The figures come from the Interactive Advertising Bureau's quarterly Internet Advertising Revenue Report released today, which included both fourth-quarter and full-year 2006 figures.

Hit record high
U.S. online ad revenue reached a record high of $4.8 billion last quarter, an increase of 33% over the 2005 fourth quarter. The 2006 full-year total was $16.9 billion. Display advertising and keyword search were up $3.7 billion and $6.8 billion, respectively, last year.

Randall Rothenberg, president-CEO of the IAB, said in the announcement that the growth is coming from advertisers using the web to drive product awareness, purchase intent and brand loyalty. "We have every confidence that this growth trend will continue as marketers allocate more of their total marketing dollars to interactive and the industry delivers effective and innovative platforms for connecting with consumers," he said.

As in past years, ad revenue was concentrated among top publishers. The top 10 raked in $11.6 billion, or 69% of total online ad revenue, down slightly from the 72% share those publishers had in 2005. The top 50 publishers accounted for 93% of the online ad market.

Rich-media share drops
While much of the buzz circulates around broadband video, rich media as a share of total online ad revenue actually dropped, increasing total dollars by a lower-than-industry rate, from $1 billion in 2005 to $1.2 billion in 2006. But Sheryl Draizen, senior VP-general manger, IAB, said that the growth is coming.

"I think that everyone is talking about broadband digital video, but it hasn't happened yet," Ms. Draizen said. "There's still a lot of potential."

E-mail's share remained flat, although total dollars spent on the tactic was up 34% to $338 million. Ms. Draizen suggested e-mail may be reaching a plateau and that spam-blocking by consumers also is a key factor in its slow growth. The IAB has developed guides to provide marketers with information that will make e-mail campaigns more effective.

"Authentication and deliverability issues for e-mails need to be delved into," Ms. Draizen said. "It's really about what are the best practices for e-mail that they have the highest percentages to get to the audiences they need to reach."